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First, the good news. Nonfarm payroll jobs increased by 163,000 in July, considerably beating the consensus forecast of 100,000. It is always good to be surprised in the positive direction. Taking into account the labor market’s performance in May and June, the three-month moving average now stands at 105,000 jobs per month. The private economy did better than total nonfarms, adding 172,000 jobs in July.
The headline unemployment rate ticked up just a bit, from 8.2 percent in June to 8.3 percent in July. Over forty percent of those have been unemployed for longer than six months — a total of 5.2 million workers. A measure of the unemployment rate which includes people marginally attached to the labor force and people employed part-time for economic reasons stands at 15 percent.
The employment-to-population ratio (my preferred measure of labor market performance) fell two-tenths of a percentage point to 58.4 percent. While the economy added 163,000 nonfarm payroll jobs in July, the labor force shrunk by 150,000 workers.
Despite this surprisingly-positive report, we still have a jobs gap that runs in the millions, we still have millions of long-term unemployed, and we still have extremely high overall unemployment.
Of course, there’s only so much that the government can do. But there are steps that can be taken. My AEI colleague Stephen Oliner wrote this week that the Federal Reserve should do more. The federal government can do more, too. An obvious solution is to remove some of the regulatory burden facing firms and to work together to resolve some of the massive policy uncertainty which businesses currently face, both of which are putting headwinds on the ability of businesses to create jobs. With the labor market in such bad shape, who could disagree?
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